The nation’s first Net Neutrality complaint filed with the Federal Communications Commission accuses Time Warner Cable of refusing to provide the best possible path for its broadband customers to watch a series of high-definition webcams covering San Diego Bay.

Commercial Network Services’ CEO Barry Bahrami wrote the FCC that Time Warner Cable is degrading its ability to exercise free expression by choosing which Internet traffic providers it directly peers with and which it does not:

I am writing to initiate an informal complaint against Time Warner Cable (TWC) for violating the “No Paid Prioritization” and “No Throttling” sections of the new Net Neutrality rules for failure to fulfill their obligations to their BIAS consumers by opting to exchange Internet traffic over higher latency (and often more congested) transit routes instead of directly to the edge provider over lower latency peering routes freely available to them through their presence on public Internet exchanges, unless a payment is made to TWC by the edge provider. These violations are occurring on industry recognized public Internet peering exchanges where both autonomous systems maintain a presence to exchange Internet traffic, but are unable to due to the management policy of TWC. As you know, there is no management policy exception to the No Paid Prioritization rule.

By refusing to accept the freely available direct route to the edge-provider of the consumers’ choosing, TWC is unnecessarily increasing latency and congestion between the consumer and the edge provider by instead sending traffic through higher latency and routinely congested transit routes. This is a default on their promise to the BIAS consumer to deliver to the edge and make arrangements as necessary to do that.

The website responsible for initiating the complaint shows live webcam footage of the San Diego Bay.

Bahrami’s complaint deals with interconnection issues, which are not explicitly covered by the FCC’s Net Neutrality rules that prohibit intentional degradation or paid prioritization of network traffic. For years, ISPs have agreed to “settlement-free peering” arrangements with bandwidth providers that exchange traffic in roughly equal amounts with one another. To qualify for this kind of free interconnection arrangement, CNS’ webcams must be hosted by a company that receives about as much traffic from Time Warner Cable customers as it sends back to them — an unlikely prospect.

As bandwidth intensive content knocks traffic figures out of balance, ISPs have started demanding financial compensation from content producers if they want performance guarantees. This is what led Comcast, Verizon and AT&T to insist on paid interconnection agreements with the traffic monster Netflix.

Time Warner Cable is calling on the FCC to dismiss Bahrami’s letter on the grounds it is not a valid Net Neutrality complaint.

“[The FCC should] reject any complaint that is premised on the notion that every edge provider around the globe is entitled to enter into a settlement-free peering arrangement,” Time Warner Cable responds. That is a nice way of telling CNS it doesn’t get a premium pathway to Time Warner Cable customers for free just because of Net Neutrality rules.

Bahrami responds Time Warner’s attitude is based on a distinction without much difference because he is effectively being told CNS must pay extra for a suitable connection with Time Warner to guarantee his web visitors will have a good experience.

“This is not a valid complaint, and there is no way the FCC is going to side with them,” Dan Rayburn, a telecom analyst at Frost & Sullivan and the founding member of the Streaming Video Alliance told Motherboard. “The rules say you can’t block or throttle, but there’s no rule that says Time Warner Cable has to give CNS settlement-free peering. I don’t see how the FCC could possibly say there’s a violation here.”

The FCC made it clear in its Net Neutrality policy it intends “to watch, learn, and act as required, but not intervene now, especially not with prescriptive rules” with respect to interconnection matters.

That makes it likely Bahrami’s complaint will either be tossed out on grounds it is not a Net Neutrality violation or more likely dismissed but kept in what will likely be a growing file of future cases of interconnection disputes between ISPs and content producers. If that file grows too large too quickly, the FCC may be compelled to act.

If your YouTube, Netflix, or Amazon Video experience isn’t what it should be, your Internet Service Provider is likely to blame.

A consumer group today implicated several major Internet providers including Comcast, AT&T, Time Warner Cable and Verizon in an Internet slowdown scheme that prevented customers from getting the broadband performance they are paying for.

A study* of 300,000 Internet users conducted by Battleforthenet found evidence some of America’s largest providers are not adequately providing connectivity for Content Delivery Networks (CDNs) that supply high-capacity traffic coming from the Internet’s most popular websites.

Significant performance degradation was measured on the networks of the five largest American ISPs, which provide Internet connectivity for 75% of U.S. households.

“For too long, Internet access providers and their lobbyists have characterized Net Neutrality protections as a solution in search of a problem,” Tim Karr from Free Press told the Guardian newspaper, which had advance notice of the study. “Data compiled using the Internet Health Test show us otherwise – that there is widespread and systemic abuse across the network. The irony is that this trove of evidence is becoming public just as many in Congress are trying to strip away the open Internet protections that would prevent such bad behavior.”

The study revealed network performance issues that would typically be invisible to most broadband customers performing generic speed tests to measure their Internet speed. The Open Technology Institute’s M-Lab devised a more advanced speed test that would compare the performance of high traffic CDNs across several providers. CDNs were created to reduce the distance between a customer and the content provider and balance high traffic loads more evenly to reduce congestion. The shorter the distance a Netflix movie has to cross, for example, the less of a chance network problems will disrupt a customer’s viewing.

If technicians controlled the Internet, the story would end there. But it turns out money has gotten between Internet engineers with intentions of moving traffic as efficiently as possible and the executives who want to be paid something extra to carry the traffic their customers want.

That may explain why Comcast can deliver 21.4Mbps median download speeds for traffic distributed by a CDN Tier1 IP network called GTT to customers in Atlanta, while AT&T only managed to squeeze through around 200kbps — one-fifth of 1Mbps. It turns out AT&T’s connection with GTT may be maxed out and AT&T will not upgrade capacity to a network that sends AT&T customers more than twice the traffic it receives from them without direct compensation from GTT.

Internet traffic jam, at least for AT&T customers in Atlanta trying to reach content delivered by GTT.

An AT&T U-verse customer in Atlanta would probably not attribute the poor performance depicted in M-Lab’s performance test directly to AT&T because Internet responsiveness for other websites would likely appear normal. Customers might blame the originating website instead. But M-Lab’s performance results shows the trouble is limited to AT&T, not other providers like Comcast.

AT&T: Slow down, you move too fast.

The issues of performance and peering agreements that provide enough capacity to meet demand are close cousins of Net Neutrality, which is supposed to prevent content producers from being forced to pay for assurances their traffic will reach end users. But that seems to be exactly what AT&T is asking for from GTT.

“It would be unprecedented and unjustified to force AT&T to provide free backbone services to other backbone carriers and edge providers, as Cogent et al seek,” AT&T wrote in response to a request from several CDNs to disallow AT&T’s merger with DirecTV. “Nor is there any basis for requiring AT&T to augment network capacity for free and without any limits. Opponents’ proposals would shift the costs of their services onto all AT&T subscribers, many of whom do not use Opponents’ services, and would harm consumers.”

* – When a copy of the study becomes publicly available, we will supply a link to it.

Correction: It is more accurate to describe GTT as a “Tier1 IP network” which supplies services to CDN’s, among others. More detail on what GTT does can be found here.

Could this be Comcast’s next target?

As Wall Street continues contemplating mom and dad at the FCC and Department of Justice calling off Comcast’s elopement with Time Warner Cable, some analysts believe Comcast will have to spend the money now burning a hole in its pocket on something.

“Given the strength of Comcast’s balance sheet and an insatiable appetite for acquisitions, we do not believe Comcast would be content with its existing portfolio (no different than after they failed in their 2004 attempt to buy Disney),” wrote Richard Greenfield from BTIG Research.

Greenfield has grown increasingly pessimistic about the Comcast-Time Warner Cable deal since realizing regulators were not going to follow the usual procedure of rubber-stamping approval with mild, short-term conditions to appease politicians. As President Barack Obama highlights telecommunications public policy in his second term, the cable industry (and broadband in particular) has come under unprecedented scrutiny and visibility in the press.

This winter, the FCC redefined broadband speed to mean a connection offering at least 25Mbps. That virtually eliminates DSL as a meaningful competitor, and would hand a combined Comcast/Time Warner Cable over 55% of broadband homes in the United States. The FCC’s approval of Net Neutrality and regulating broadband as a public utility led the audience in attendance to give a standing ovation to Chairman Thomas Wheeler and the two Democratic commissioners voting in favor of the policy change. The public sentiment is clearly against industry deregulation and unfettered deal-making, particularly when it involves Comcast, one of the most-loathed corporations in America.

Greenfield

Greenfield notes momentum is on the side of consumer groups fighting for Net Neutrality, oversight, and an end to cable industry consolidation.

Assuming Comcast’s deal with Time Warner Cable fails, what can Comcast spend its money on without running into a regulator buzzsaw?

Comcast could easily continue a mergers and acquisitions strategy if it avoids attempting to dramatically increase its cable footprint. For instance, Comcast could still choose to sell some of its less important cable systems to Charter Communications — already part of the proposed Time Warner Cable transaction — and make up that subscriber loss by acquiring Cablevision, which provides service in the important suburban New York City market. Of course, the Dolan family is notorious for not selling to anyone, and a considerable number of extended family members are employed as executives in the company.

Cable operators have returned to a strategy of hedging their content costs by spending billions to acquire content producers and sports teams in hopes of moderating their price demands. In the 1980s and early 1990s, large cable operators insisted on owning a piece of nearly every cable network shown on their systems. Today, having an ownership stake in the cable networks one negotiates with at contract renewal time is a helpful advantage.

Comcast has several attractive acquisition targets Greenfield believes it can consider:

• Time Warner (Entertainment): Not affiliated with Time Warner Cable, owning Time Warner (Entertainment) would gain Comcast important cable networks like TNT, HBO, and the Warner Bros. studio.
• Netflix: Acquiring one of the best assets cord cutters have might prove difficult with regulators in Washington, but buying the ultimate TV Everywhere experience could deliver a digital platform that puts Comcast’s own online content portal to shame. The deal would also come with the talent that made Netflix an international success. If Comcast were to acquire Netflix, it would combine a superior streaming platform with an enormous content library.
• Acquire online video content sites and producers: Linear live television continues to be challenged by an array of on-demand content and video clips from various websites like Vice — videos that could be further monetized by matching Comcast’s advertising sales team with online media.
• Next generation online video set-top box manufacturers: The traditional cable box is dead to a lot of subscribers who prefer the simplicity (and price) of Roku and other similar alternatives. Current cable boxes are huge, expensive, and simply lack the creative imagination of the competition. If Comcast can’t beat Roku, it could buy it.
• Buy Sprint or T-Mobile: Greenfield believes Comcast lacks a wireless component in its product lineup as consumers increasingly move towards portable devices. Comcast would be financially foolish to build a network from the ground up, so acquiring an existing one makes more sense. AT&T and Verizon Wireless are likely out of reach, but Sprint and T-Mobile are not. Both carriers’ parent companies seem ready to sell, if the price is right. Of the two, Sprint might be willing to sell first. Sprint’s owner — Japan’s Softbank — has discovered the United States is a huge country that can swallow up endless amounts of investment and still leave it saddled with a second-rate network.

Greenfield is only speculating and there are no indications Comcast is seriously considering a next move should the Time Warner Cable deal be killed in Washington. But it does signal Wall Street does expect Comcast to do something.

That is DISH’s CEO banging the drum beside a panoply of kangaroos. (Image courtesy: Gizmodo)

The ultra high-definition, bandwidth chewing 4K television standard has arrived and like HDTV before it, the first place most Americans will get to sample the new standard is over satellite television.

DISH Network is planning to introduce HDMI/HDCP 4K television owners to its new 4K Joey this year — a souped-up set-top box that can handle the high demands of 4K video.

DISH is using a Broadcom dual-core chipset and 7448 ARM processor that can handle the next standard in high-definition viewing.

While DISH set-top boxes will be ready for 4K, many cable and DSL broadband networks in the United States will face difficulties handling the online video demands that 4K video will place on their networks. In tests, watching an average movie required a minimum of a maxed out 10Mbps broadband connection. Live programming, particularly sports, required considerably more broadband speed to keep up. Few DSL networks will be able to sustain more than a handful of customers attempting to stream 4K video before neighborhood nodes become overwhelmed. Even the DOCSIS cable broadband standard still relies on shared bandwidth, and a few video aficionados in the neighborhood could pose significant challenges and speed slowdowns for other customers in the area.

Besides satellite, only fiber optic broadband will be ready to handle the practical requirements of streaming 4K video without significant upgrades.

DISH’s plans to stream video content over the Internet could one day also include 4K programming, but viewers are likely to run smack into usage caps and usage billing that ISPs are using to deter online video from gutting cable television revenue as well as further monetizing already highly profitable broadband.

Downloading just three 4K movies consumed 90GB and took more than a day to download, even with Comcast’s 100Mbps broadband service. In usage-capped markets, fewer than a dozen 4K movies would eat your entire monthly allowance. Each additional movie would subject Comcast customers to overlimit fees averaging around $6 per title.

Although DISH will offer a set-top box to handle 4K viewing, content producers are still waiting to see whether the public embraces the next HD standard before investing heavily in programming delivered using the new standard. DISH would only promise content from “several providers” would be forthcoming by the time the 4K Joey is released during the second quarter.

The majority of 3.7 million comments received by the FCC advocate strong and unambiguous Net Neutrality protections for the Internet, but that seems to have had little impact on FCC chairman Thomas Wheeler, who is laying the groundwork for a hybrid Net Neutrality Frankenplan that would marginally protect deep pocketed content producers while leaving few, if any, protections for consumers.

The Wall Street Journal reported late last week that Wheeler is considering a “hybrid” approach, separating broadband into two distinct services:

• Retail Broadband, sold to consumers, would continue as a broadly deregulated service, allowing ISPs to set prices and policies with little, if any, oversight. Wheeler’s plan would allow providers to freely implement usage-based pricing, establish paid fast lanes at the request of customers, and permit ISPs to continue exempting preferred content from usage pricing while charging customers extra to access content from “non-preferred partners;”
• Wholesale Broadband, the connection between your ISP and content producers, would be reclassified under Title II and subject to common carrier regulations, which would allow the FCC to police deals between your provider and services like Netflix.

Wheeler’s proposal would offer significant protection to wealthy content producers like Netflix, Amazon.com, broadcasters and Hollywood studios, but would leave consumers completely exposed to providers’ pricing tricks, usage caps/consumption billing, and paid fast lanes that could leave unpaid content vulnerable to network deterioration, especially during peak usage times.

Large telecommunications companies argue that deregulation promotes broadband investment and expansion to create world-class service. But years of statistics and comparisons with other countries suggest deregulation has not inspired sufficient competition to keep prices in check and force regular network upgrades. In fact, competition is much more robust at the wholesale level, while the majority of retail consumers have a choice of just one or two providers that receive almost no oversight. Those providers are now exercising their market power to further monetize broadband usage to boost profits and raise prices.

Wheeler’s proposal would ignore the wishes of more than three million Americans that want comprehensive Net Neutrality protections, as well as those of President Barack Obama, who has called for a ban on paid fast lanes. A senior White House official signaled Thursday the administration has concerns about Wheeler’s proposal, noting “the president has made it abundantly clear that any outcome must protect net neutrality and ban paid prioritization—and has called for all necessary steps to safeguard an open Internet.”

“This Frankenstein proposal is no treat for Internet users, and they shouldn’t be tricked,” consumer group Free Press CEO Craig Aaron said in a statement. “No matter how you dress it up, any rules that don’t clearly restore the agency’s authority and prevent specialized fast lanes and paid prioritization aren’t real Net Neutrality.”

Broadband providers don’t like Wheeler’s plan either. Verizon last week sent comments to the FCC warning any attempt to reclassify broadband under Title II “could not withstand judicial review.” Others, including the industry-backed U.S. Telecom Association, promised swift legal action against Wheeler’s proposal.

Aaron believes the last thing broadband needs is another “hybrid” plan.

“The FCC has already tried twice before to invent new classifications on the fly instead of clear rules grounded in the law,” Aaron said. “And twice their efforts have been rejected. This flimsy fabrication will be no different. And this approach will only serve to squander the political support of millions and millions of Americans who have weighed in at the agency asking for strong rules that will stand up in court.”